Average Money Market Account Rates for the Week of April 15, 2024

Money market accounts (MMAs) are deposit accounts that earn higher annual percentage yields (APYs) than traditional savings accounts. These accounts allow easy access to your money—a valuable convenience if you need to tap your savings in an emergency. These accounts also offer flexibility with the ability to write a limited number of checks, and some even allow debit transactions.

The Federal Reserve’s aggressive interest rate hikes that spanned most of 2022 and 2023 have been a drag on the housing market but a boon to deposit accounts like money market accounts. According to Federal Deposit Insurance Corporation (FDIC) data, money market account rates averaged 0.08% in March 2022, but as of March 2024, rates averaged 0.67%. Keep in mind, the best money market accounts offer rates substantially higher than the national average.

Savers depositing money in these accounts have enjoyed steady earnings, and the outlook remains positive in the short term.

• According to Bankrate data, the current average interest rate on money market accounts is 0.47%.
• If you’re looking for a higher yield, the top money market accounts offer rates between 4.65% and 5.30%.
• In December, the Federal Reserve projected rate cuts in 2024, which could result in a dip in yield rates in 2024.
• The Fed raised rates 11 consecutive times over 2022 and 2023, with some increases as high as 75 basis points. Most MMA account rates remain elevated compared to 2021 when the year closed with a paltry average rate of 0.07%.

How Does a Money Market Account Work?

A money market account is sometimes referred to as a hybrid savings deposit account. It earns interest like a standard savings account but includes features of a checking account, like the ability to write a limited number of checks and debit card transactions. Interest rates for money market accounts are usually significantly higher than a typical savings account.

You can open a money market account at most banks and credit unions, and the best rates are often available through online banks. Some financial institutions have minimum balance requirements and charge fees if you don’t maintain the specified amount. While the government no longer requires banks to limit transactions on savings accounts, some banks still cap monthly transactions to six checks or debit transactions.

Why Should You Open a Money Market Account?

You might prefer a money market account if you’re frustrated by the low yields your traditional savings account earns. With a top money market account, you could earn upwards of 4% or 5% on your deposit balance, instead of a yield hovering around the 0.65% mark in recent months.

MMAs can also benefit you with their hybrid checking and savings features. For example, a money market account is a valuable place to stash your cash for a short-term savings goal, like saving for a down payment on a home. Your money can earn interest on your funds until it’s time to put down your down payment. Then, you can use a check or debit card to submit your down payment without needing to transfer your money to a separate checking account.

Pros

• Higher interest earnings than other accounts. Not only do money market accounts have higher yields than standard savings accounts, they also provide an opportunity to earn interest on money that would earn nothing in most checking accounts.
• Safe account to park your cash. As a deposit account, the funds in your money market account can’t lose money like they might in another investment. Money market accounts are federally insured up to $250,000 per account holder.
• Convenient access to funds. Having the ability to write checks and use a debit card gives you greater flexibility with your money than a traditional savings account. And unlike certificates of deposit (CDs), you can access your money at any time without being locked into a specific term.

Cons

• Growth may not match other options. High-yield savings accounts and CDs may offer greater yields than money market accounts. Similarly, investing in traditional assets like stocks and bonds could yield greater returns over time.
• Must meet account requirements. Many financial institutions require a minimum opening deposit and a minimum balance requirement you must meet to avoid fees.
• Interest rates can fluctuate. Interest rates on money market accounts can move up or down at any time based on the overall market’s interest rate. The rate you receive today could be higher than average but could dip in reaction to the market. Also, some banks only offer higher rates to customers who meet a specific minimum balance requirement.

How To Open a Money Market Account

Opening a money market account is as straightforward as opening any banking account. Follow these steps to get started:

1. Compare money market accounts offered by banks and credit unions. Start by reviewing your current financial institution’s money market account offers or explore banks and credit unions to see which offer the best balance of competitive interest rates, low fees and manageable minimum balance requirements. Online banks often provide some of the best interest rates and low or no minimum deposit requirements. Finally, protect your money by making sure any account you’re considering comes with FDIC or NCUA federal deposit insurance up to its limits.
2. Gather your necessary information. Once you’ve selected the money market account you want to open, be prepared to provide basic information about yourself with your application, such as your name, address and contact information, your Social Security number or individual taxpayer identification number, your Driver’s license, passport or other government-issued photo ID, and a second form of identification like your Social Security card or birth certificate.
3. Open and fund your account. After submitting your application, all that’s left to do is deposit money into your new money market account. Verify if there’s a minimum amount needed to open the account. If not, consider starting with a smaller deposit, just to ensure everything with your account is set up correctly.

Remember, the best money market accounts combine high interest rates with low fees to help you grow your money faster. Keep tabs on the latest money market account rates and trends in Newsweek Vault to help you optimize your savings growth.

Vault’s Viewpoint: MMA Rate Trends for 2024

Rates on money market accounts ticked upwards throughout 2023, which should remain elevated at the start of the new year. FDIC data from March 2024 shows an average money market rate of 0.67% APY, compared to just 0.08% in March 2022—and the current rate is over nine times higher than the 0.07 average yield at the close of 2021.

While the Federal Reserve doesn’t set rates for money market accounts, it does set the federal funds rate. The federal funds rate serves as a benchmark financial institutions generally refer to when calculating their own rates, including those for money market accounts. Consequently, rate fluctuations for money market accounts often mirror the Federal Reserve’s rate changes.

When the Fed raised interest rates 11 consecutive times, dating back to March 2022, MMA rates climbed steadily from 0.08% in March 2022 to 0.63% in July 2023. Since that time, the Fed has paused rates three consecutive times, and money market accounts have continued to hover around the current rate.

If the Federal Reserve follows through on projected rate cuts in 2024, it could lead to a decrease in the average money market account rate. Regardless of the average rate, the top money market accounts historically offer substantially higher rates than the average yield.

Methodology

Bankrate displays two sets of rate averages that are produced from two surveys conducted by Bankrate: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

The rates on this page represent Bankrate’s overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.